Articles of interest to people living in or involved with co-operative or condominium apartments in New York City. An emphasis will be on improving and running a building, which is of special interest to board members.

Thursday, August 10, 2006

Many New York apartment hunters find it easy to fall in love with cooperatives and condominiums in buildings that have lavish turn-of-the-century exteriors. What these would-purchasers find less endearing than the intricate stone carvings and terracotta cornices are the possible complications and tremendous cost of maintaining these extreme façades.

Often, the more architecturally ornate a building, the higher the hurdles tenants face when making even interior renovations, and the more costly the assessments can be, a senior vice president at Prudential Douglas Elliman, Corinne Pulitzer, said.

Ms. Pulitzer, herself a longtime tenant in one pre-war Park Avenue cooperative, said she and other shareholders recently absorbed the $1 million cost of repairing the building's façade and elaborate cornices. "It's a privilege to buy in a building with such a history, but it's also an obligation to maintain,"she said.

Some New Yorkers drawn to apartment buildings with extensive façades have a keen appreciation of Old World architectural elements and the upkeep they require, she said.

Others don't understand how restrictive these buildings can be when it comes to making renovations, even common ones like installing through-thewall air-conditioning units or new windows, another broker, Andrew Phillips, said. "Mostly, they're not thinking about it when they're buying an apartment," Mr. Phillips, a senior vice president of Halstead Property, said.

A highly decorative exterior is generally a "selling point" for a buyer looking to make a pre-war apartment purchase, an executive vice president at Elliman, Tamir Shemesh, said. "It's obviously pretty rare, because there's a limited amount of ornate façades"he said."You need to realize that if the façade needs reappointing, it's going to cost a lot more than it would in a regular building."

If the Alwyn Court, for example, were to undergo a large-scale façade restoration, as it did in the early 1980s, it would be a mega-million project.The exterior details of that West 58th Street French Renaissance-style building appears more suited for a Loire Valley castle than a Midtown apartment building. Its intricate terracotta ornaments, covering the entire façade, make the 1909 structure eye-catching amid some more modest neighbors.

Situated off Seventh Avenue, the Alwyn Court is among Manhattan's most ornate façades. Other examples include the Ansonia, the Pythian, and the Lucerne, all on the Upper West Side; the New York Yacht Club in Midtown; the Bayard-Condict Building in NoHo, and the former Loews Theatre in Washington Heights, architectural scholars said.

Such decorative exteriors — evidence of the nation's burgeoning wealth and prosperity — finally fell out of favor following World War II, and the style was never fully revived, despite a short-lived effort to reintroduce them during the 1980s, the scholars say.

"The style endures, but not among the elite architectural practitioners," the director of technical services at the New York Landmarks Conservancy, Alexander Herrera, said. He added that the city is peppered with "failed efforts" of contemporary designers who have attempted to revive elaborate building ornaments.

"The hardest thing to get right is the proportions, and the proportional system used by traditional architects, which is very complicated and something practically nobody understands anymore," Mr. Herrera said.

Today's top architects are more interested in experimenting with new forms and materials than in reviving more classical styles, Mr. Herrera said, citing Frank Gehry and Zaha Hadid. "I think they want to use their imaginations, and come up with something new, like every other generation," he said.

Mr. Herrera said city façades became progressively grander during the 19th century, through the early 20th century. He said the Art Deco movement of the 1920s and 1930s proved to be ornamental architecture's "last gasp" before a more austere form of modernism took hold.

A fellow at New York's Institute of Classical Architecture and Classical America, Francis Morrone, a columnist for The New York Sun, said he rejects the notion that the cost is too high or the craftsmanship too intricate to create cost-effective buildings with façades as detailed as their counterparts from a century ago. "There's no reason why we can't do that today," he said.

According to Mr. Morrone, the Institute of Classical Architecture is one of two American schools of architecture — the other is at the University of Notre Dame — where the curricula are based on classical technique.

An architect and a real estate developer for JSS Advisors in New York, Eugene Sisco, said he knows of few contemporary developers willing to build in elaborate Old World style. "People want light, and they want air," he said, referring to the boom in glass residential construction. "They don't want punched openings, the type of windows you see when you go down Park Avenue. Modernism, not Postmodernism, remains the dominant theme in architecture today."

Wednesday, August 9, 2006

THERE'S an old "Saturday Night Live'' skit in which Eddie Murphy sets out to experience life as a white man in New York. He starts in a dressing room, where makeup artists lighten his skin as he studies up by reading Hallmark cards. Duly prepared, he wades into Midtown Manhattan calling himself Mr. White.

His first stop is a newsstand, where the white cashier conspiratorially tells him to take a newspaper without paying for it. Then comes a ride on a public bus that morphs into a lounge with cocktails and music after the last black rider gets off.

Finally, Mr. White enters the Equity National Bank to ask about borrowing $50,000 even though he has no identification, no collateral and no credit history. But no matter. Such things are mere "formalities," a loan officer says, while removing stacks of cash from a metal box. "Just take what you want, Mr. White. Pay us back anytime. Or don't. We don't care."

Back in 1984, when the skit was shown on NBC, nobody would have imagined that it was poking fun not just at race, but also at banks' lending standards. At the time, not even a white man in a gray suit could have gotten a loan without any documents and paid it back at his leisure.

But if you watch the skit today on YouTube or a DVD, you can't help but see another, unintended layer of satire. In the last few years, so-called no-doc and low-doc mortgages — in which loan applicants can avoid formalities like pay stubs and instead simply state their income — have surged in popularity. Critics call them "liars' mortgages."

And banks, which often sell a mortgage to a group of investors shortly after issuing it, sometimes seem downright relaxed about how quickly borrowers will repay a loan. The hottest mortgage for the last year has been something called an "option ARM" that comes with a choice of payments on each monthly bill. In California, more than 25 percent of new mortgages this year have been option ARM's, up from about 5 percent in 2004, according to LoanPerformance, a mortgage data firm.

The main point of these innovations has been to sustain the housing boom by allowing a family that can't really afford a house to buy it anyway. But clearly, this can't last. Already, it has raised the risk of a sharp housing downturn and, eventually, of a recession. The Federal Reserve acknowledged as much yesterday by halting its campaign of interest rate increases.

So the housing industry is going to have to find a new business plan. Fortunately, there is one small sliver of the market — here in New York, as a matter of fact — that has kept its wits and can serve as a model. The trouble is that it's not usually considered to be a model for anything. Indeed, it may be the most hated institution in New York.

Let us now praise the co-op board.

COOPERATIVE living got its start in the 1880's, inspired by Charles Fourier, a French socialist who argued that cooperation bred efficiency. A French immigrant to New York named Philip Hubert picked up on the idea and built arguably the first co-op, the Hubert Home Club, near the current site of Carnegie Hall.

Despite their utopian origins, co-ops quickly turned into a celebration of capitalism and exclusivity. Soaring new Hubert Home Clubs opened on Madison Avenue and next to Central Park, offering the sort of living space that has always made New Yorkers envious, according to the writer Elizabeth Hawes.

Today, co-ops — which sell shares in a corporation that owns the building, rather than individual apartments — make up about three-quarters of the city's apartments. As always, the boards have the right to reject any buyer who doesn't quite fit, however they define "fit." More than a few co-op boards would have made good fodder for the Mr. White skit.

Anyone who has ever been interviewed by a board knows what a humiliating process it can be. Its members can demand bank statements from you, ask about intimate details of your life and then reject you without saying why. Or the board can admit you and make life miserable once you have moved in. In the 1990's, one co-op resident on the Upper West Side was moved to have a party after the board president died.

But say this for most co-op boards: they take their fiduciary duties seriously. They generally require at least a 25 percent down payment, and while the rest of the real estate business has been getting more permissive, co-op boards have been using the sellers' market of the last few years to crack down. Some Park Avenue co-ops require buyers to have a net worth equal to four times an apartment's price, up from the old standard of three, said Jonathan Miller, an appraiser.

So thanks in large part to co-ops, the shadiest parts of the housing boom are less common in New York. Less than 8 percent of mortgages issued in the metropolitan area this year have been option ARM's. The share is closer to 30 percent in most other cities as expensive as New York.

It's hard not to conclude that New York's high prices are based more on economic fundamentals than those in California or South Florida. (And no, I don't own property in New York, though I have relatives who do.) The city surely won't be immune to a downturn, but it does seem less likely to crash. In the last year, price increases here have slowed far less than those in San Francisco, San Diego, Boston, Connecticut or Long Island.

Most real estate experts still consider a crash — say, a 20 percent decline — to be unlikely, even in California. But there is now a legitimate risk that the excesses of the housing boom have laid the groundwork for an economic downturn. At the very least, some families are going to regret having taken out such aggressive loans when the higher payments eventually come due.

In coming months, federal regulators plan to issue new guidelines that will remind banks of the risks inherent in their new products and will encourage them to disclose the risks to borrowers. But the guidelines are pretty mild, and they're not exactly ahead of the curve.

The real lesson of co-op boards, then, will have to fall to those of us doing the borrowing. When you're about to take on hundreds of thousands of dollars in debt, you will probably do well to be conservative, to ask whether you can make the payments even if something goes wrong, rather than only if housing prices keep rising, interest rates start to fall and you get a big raise. Consider it a mantra for a newly sane real estate market: Embrace your inner co-op board.